Danny Meyer, the founder and executive chairman of Union Square Hospitality Group, discussed the transforming power of hospitality in early November as part of the Paul Wise Distinguished Speaker Series at the University of Delaware.
The series, sponsored by the Department of Hospitality and Sport Business Management at UD’s Alfred Lerner College of Business and Economics, featured a chat between Meyer and Sheryl Kline, deputy dean at Lerner College and Aramark Chaired Professor in the department.
“The point of the speaker series is to expose our students to the best in the industry,” Kline said. “Danny Meyer is a thoughtful leader, innovator and successful restaurant entrepreneur. We want our students to learn and be inspired by his business acumen and values.”
The pair discussed Meyer’s groundbreaking book, Setting the Table, a New York Times bestseller that articulates a set of signature business and life principles that translate to a wide variety of industries.
“We were thrilled to have Danny on campus to speak to our students because he explains the unique value that hospitality brings to all types of businesses,” Kline said. “Students majoring in hospitality know that providing hospitality is an essential element to the success in our industry, and Danny has articulated the key ingredients of providing hospitality and how it benefits all businesses.”
In the book, Meyer explains the concept of enlightened hospitality, a philosophy that emphasizes employees over customers, the community and suppliers and even investors, and draws a clear distinction between service and hospitality.
Meyer’s first restaurant, Union Square Café, never ranked higher than 15th in the food, décor or service categories in the Zagat Survey, a yearly rating of restaurants across the country. However, Union Square often seemed to be mentioned when New Yorkers were asked to name their five favorite restaurants, and finally rose to number two on the list.
“It then struck me that hospitality might be more crucial than service, and that they are very different,” Meyer said. “Service is the technical delivery, and hospitality is the emotional way you made someone feel while they were in your restaurant.
“So that’s why we are always working on the service aspect, even though we’ll never be perfect in that area. But I do think that we can constantly also achieve more in hospitality, because I don’t know any person who wouldn’t want to feel better after visiting one of our restaurants.”
Ten years into his career, Meyer said, his concept of enlightened hospitality still remained only a concept. It was at his second restaurant, Gramercy Tavern, where a regular guest’s unpleasant experience led Meyer to put his thoughts onto paper.
“The situation was my fault because I had never clarified with words,” Meyer said. “I was doing it all, but I’d never clarified.
“Following a staff meeting, I wrote down enlightened hospitality, and I wrote exactly what I meant. I started naming things that I’d previously kept inside. And that was the moment that things started to turn around for our restaurant.”
Three years later, both Gramercy Tavern and Union Square Café were ranked in the top two spots on the Zagat Survey.
That led to Meyer coming up with a new idea called “sibling revelry”, in which he aspired to get the two restaurants to admire one another and yet still compete in a way that is helpful. This led to more of his restaurants, like Maialino and The Modern, also doing well.
“There was a year when we had five of the top 10 of New York’s favorite restaurants,” he said. “That’s what all came out of it. Just noticing and saying, ‘How could we be just a little bit better if we just use our heads and our hearts?’.”
Meyer continued emphasizing his employees’ well-being by instituting a family leave policy, so when a birth mother or father had a child they would get six weeks of paid leave. He also wanted to raise compensation for first-time managers, because many of his tipped employees were making more money than their managers, so there was no incentive to have a career path where they could progress.
Meyer also developed the idea of “hospitality included” since only customer-facing employees can be tipped, leading to the growing disparity between their wages and the wages of cooks and dishwashers. So he came up with the concept where the goal was a customer’s menu price would cover everything — food, all employees’ wages, linens, rent, insurance, etc.
However, Meyer’s restaurants were an outlier in utilizing the concept, and their prices ended up being too high to compete with other establishments. In addition, during the COVID-19 pandemic, guests tried to tip servers for putting their health on the line, and it was demoralizing for the customers when they were rejected from tipping.
“We instituted enlightened hospitality and being on our staff side first, and I know why we did hospitality to take care of our whole team and level the playing field, but it’s not on anyone’s side to not let guests say thank you,” Meyer said. “So that was the time we reinstituted the revenue share so that we wouldn’t erode the many gains we’ve made during the previous five or six years.
“Even though it didn’t work, I have no regrets that we tried it, because, philosophically, we were in the right place. Hospitality is a team sport.”
Meyer also put a positive spin on inflation, noting that his staff is making more money in a way that no minimum wage law could impact the city.
“Everybody’s compensation has gone up, so that has encouraged more people to rejoin the industry who had left during COVID,” Meyer said.
Staff at Meyer’s restaurants went from 2,400 employees to just 45 at the start of the pandemic but has now risen to more than 2,600 employees.
“During COVID, we had an opportunity to assess our industry, and with our new employees we have now accelerated our diversity, inclusion and excellence goals by at least five years. So we have painted the picture as it should have been, and that feels good,” he said.
“That pause gave us a chance to inspect our boat, and now that it’s back in the water, we want to sail better than ever. We want it to be a much more enriching trip for everybody. So we’ve accelerated a lot of things that we either didn’t have the awareness or courage that we needed. And that’s been a good thing.”